N-8NSPML (NSEB) RIR 1 to 44 - Redacted
8 passages
Credit and Collections: Attn: Controller, Energy Investments (c/o Carmel Finlay) Phone: (709)737-4986 Facsimile: (709)570-5927 With additional Notices of an Event of Default or Potential Event of Default to: Attn: Treasury & Risk Managemen...
AI summary The document provides contact information for the Controller, Energy Investments and Treasury & Risk Management related to credit and collections matters, including phone and fax numbers for communication regarding events of default.
- (b) Credit Assurances: - [] Not Applicable - [x] Applicable - (c) Collateral Threshold: - [] Not Applicable - [x] Applicable If applicable, complete the following: Party B Collateral Threshold: The amount set forth below opposite the cla...
AI summary The document outlines the conditions for determining Party B's Collateral Threshold based on their credit rating and the occurrence of an Event of Default. If applicable, the threshold is set one classification higher than the lowest credit rating of Party B, or zero if an Event of Default is ongoing.
Party B Independent Amount: S & P Credit Rating Moody's Credit Rating DBRS Credit Rating Collateral Threshold AA and above Aa2 and above AA and above $25,000,000 AA- Aa3 AA Low $22,500,000 A+ A1 A (high) $15,000,000 A A2 A $12,500,000 A- A...
AI summary The document outlines credit rating thresholds and downgrade events for Party B, specifying collateral requirements based on credit ratings from S&P, Moody's, and DBRS. A downgrade event is defined as a credit rating falling below BBB- from S&P, Baa3 from Moody's, or BBB (Low) from DBRS.
ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS 8.3 Grant of Security Interest/Remedies. Section 8.3 is deleted and replaced with the following provision: To the extent a Party delivers (each such delivering party, a "Pledgor") Performan...
AI summary This section outlines the credit and collateral requirements under the agreement, specifying that a Pledgor grants a security interest in cash or cash equivalent collateral to a Secured Party. It details the remedies available to the Secured Party in the event of a default, including setoff, drawing on letters of credit, and liquidation of collateral.
- 1.10 "Contract Price" means the price in $U.S. (unless otherwise provided for) to be paid by Buyer to Seller for the purchase of the Product, as specified in the Transaction. - 1.11 "Costs" means, with respect to the Non-Defaulting Party...
AI summary This section defines key terms related to contracts and transactions, including 'Contract Price,' 'Costs,' 'Credit Rating,' 'Cross Default Amount,' 'Defaulting Party,' 'Delivery Period,' 'Delivery Point,' 'Downgrade Event,' 'Early Termination Date,' 'Effective Date,' and 'Equitable Defenses.' These definitions provide clarity on financial obligations, legal protections, and procedural terms.
NON-CONFIDENTIAL leverage would be considered by creditors as debt obligations of NSPML. As explained in Section 2 of our report, there is a relationship between the capital structure and the authorized ROE. That is, other factors being eq...
AI summary The text discusses the impact of NSPML's new $500 million debt on its required rate of return on equity (ROE), credit rating, and future financing capabilities. It references a Board decision and asks NSPML to confirm its statements regarding the financial implications of the new debt.
NSPML Responses to Nova Scotia Energy Board Information Requests 1 NSPML's balance sheet. Actual factors will be known at the time when future 2 borrowings are pursued." 3 c) Please confirm whether it is still NSPML's view that the FLG2 tr...
AI summary NSPML confirms that the FLG2 transaction did not negatively impact its return on equity or creditworthiness. It also explains that its request for a change in its regulated capital structure is to align with industry standards, strengthen its balance sheet, and harmonize with NSP's financial profile.
1 Request IR-38: 2 3 IR-32 to IR-44 Reference Exhibit N-1, Appendix A, Concentric Expert Evidence (refer to 4 Appendix page numbers at the bottom of each page). 5 6 a) Please provide the current credit rating for each of the companies list...
AI summary The document requests the current credit ratings for companies listed in Figure 17 on page 35 of the report and specifically asks for NS Power's credit rating. The response indicates that the requested credit ratings are provided in the report.
N-11Evidence - Sean Cleary BCC
9 passages
Description S&P Fitch DBRS Moody's Maturity Date Bid Yield Ask Yield Mid-Point Fortis Alberta Inc A- A(low) Baa1u Oct-52 4.779 4.724 4.7515 Fortis BC Inc A(low) Baa1 Jul-47 4.962 4.876 4.919 CU Inc A A(high) Nov-50 4.769 4.716 4.7425 Enbri...
AI summary The table presents credit ratings and bond yield data for various Canadian utility companies, including Nova Scotia Power Inc. The analysis suggests that 4.9% is a good estimate for the current bond yield for Canadian utilities, with NS Power having a slightly higher yield of 4.97%, which will be used as the starting point for the BYPRP estimate for NS Power.
The table above shows that the September 29th yield on NS Power bonds maturing in March 2042 was 4.97%, which is 0.18% above the 4.79% average for the other five utilities. This is reflective of the fact that the other five utility yields...
AI summary The text discusses the yield on NS Power bonds compared to other utilities, noting a 0.40% spread due to lower credit ratings and shorter maturities. It estimates the cost of equity (Ke) for NS Power at 7.47%, with adjustments for flotation costs leading to 7.97%, which is higher than other estimates for Canadian utilities.
6.1 NS Power's Credit Rating Reports NS Power's January 2025 debt ratings are BBB high (stable) from DBRS Morningstar (DBRS); and, BBB-(stable) from S&P. Both reports mention the $117 million received from the provincial government for fue...
AI summary NS Power's January 2025 debt ratings are BBB high (stable) from DBRS Morningstar and BBB- (stable) from S&P, citing favorable developments like $117 million from the provincial government and a $500 million federal loan guarantee. Both reports highlight NS Power's low-risk regulated electricity business and strong business risk profile.
As noted in Section 6.1, the January 2025 DBRS report notes that NS Power has a "reasonable financial profile," while S&P noted "The stable outlook on NSPI reflects the stable outlook of its parent Emera, as well as our expectation that NS...
AI summary The January 2025 DBRS report highlights NS Power's reasonable financial profile, while S&P notes a stable outlook for NSPI due to its parent company Emera's stability and expected FFO to debt ratios of 10-11% through 2026. Table 14 provides credit metrics from 2018 to 2023, along with estimates and forecasts from DBRS and S&P.
TABLE 14 NS POWER DBRS AND S&P CREDIT METRICS (2020-2026) S&P DBRS Year Debt/EBITDA FFO/DEBT FFO/Cash CF/Debt Total Debt EBIT (%) Interest (%) (%) Interest Coverage 2020 6.0 12.0 3.8 12.6 66.6 2.02 2021 5.9 11.9 3.7 12.9 66.3 1.97 2022 7.2...
AI summary Table 14 presents credit metrics for Nova Scotia Power (NSP) from 2020 to 2026, including Debt/EBITDA, FFO/Debt, and EBIT interest coverage ratios, as assessed by DBRS and S&P. The data shows fluctuations in these metrics over time, with estimates and forecasts provided for 2024, 2025, and 2026.
Table 14 shows that NS Power's DBRS metrics have generally been at the top end of the BBB rating range and bordering on (or slightly in) the A range. For example, according to page 8 of DBRS' June 2024 discussion of its methodologies for r...
AI summary Table 14 indicates that NS Power's DBRS metrics are at the upper end of the BBB rating range and near the A range. DBRS provided guidelines for its Financial Risk Assessment of regulated utilities in June 2024.
\ \ \ Forecast metrics from S&P. Regulated Utility – FRA Metrics Metric AA Α BBB BB/B Cash flow-to-debt (%) > 17.5 12.5 to 17.5 10.0 to 12.5 0.0 to 10.0 Debt-to-capital (%) < 55 55 to 65 65 to 75 75 to 90 EBIT-to-interest (x) > 2.8 1.8 to...
AI summary The document presents credit metrics from S&P for regulated utilities, including cash flow-to-debt, debt-to-capital, and EBIT-to-interest ratios. It also compares NS Power's historical and forecast metrics to S&P's categories for credit risk, noting that while NS Power has an 'aggressive' financial risk rating, most of its metrics fall into less risky categories.
6.5 Summary Overall, this section highlights that NS Power is a low-risk Canadian utility; however, it is slightly riskier than the average A-rated Canadian operating utility. This conclusion is consistent with the following main points re...
AI summary The summary highlights that NS Power is a low-risk Canadian utility, though slightly riskier than average A-rated utilities. Its debt ratings are stable, and its financial risk profile is reasonable. A 40% allowed equity ratio is deemed reasonable despite lower debt ratings compared to some utilities, partly due to its parent company Emera Inc.'s higher ratings and the low-risk financing of the Maritime Link project.
Comparing the Risk of Canadian Utilities to U.S. Utilities The DBRS Morningstar January 15, 2025 debt rating report for NS Power identified "low-risk regulated electricity business" as the #1 consideration in its business risk assessment,...
AI summary The document compares the business risk of Canadian regulated utilities, such as NS Power, to U.S. utilities. Canadian utilities are viewed as low-risk due to supportive regulatory environments, while non-regulated industries face higher variability and competition. Debt rating agencies like DBRS Morningstar and S&P have consistently rated Canadian utilities as strong in terms of business risk.
N-17Alberta Utilities Commission
Decision 27084-D02-2023
10 passages
7.1 Overview, approved deemed equity ratios for 2024, and review timeframe - 202. To satisfy the fair return standard, the Commission is required to determine a fair return on the deemed equity component of invested capital. In this sectio...
AI summary The Commission determines the approved deemed equity ratios for 2024, maintaining a uniform return on equity (ROE) of 9.0% and adjusting deemed equity ratios based on risk differences among utilities. The deemed equity ratio of 37% for most utilities and 39% for Apex is set to ensure a fair return and support credit ratings in the A-range. The ratios will be reviewed every five years or when the ROE formula is reviewed.
7.3 Targeted credit ratings - 218. The targeting of credit ratings in the A-range is one of the factors the Commission will continue to use as part of its determination of the deemed equity ratios for 2024 and beyond. - 219. Credit ratings...
AI summary The Commission emphasizes the importance of maintaining a target credit rating in the A-range for Alberta utilities to ensure financial integrity, attract capital, and maintain fair return standards. Most utilities have successfully maintained their credit ratings since the 2018 GCOC proceeding, except for ENMAX, which saw a downgrade due to a debt-financed acquisition unrelated to its Alberta operations.
7.4 Credit metrics - 222. Dr. Villadsen, 227 D. D'Ascendis, 228 D. Madsen 229 and Dr. Cleary 230 each took the position that their respective recommended deemed equity ratios either considered credit metrics, or were supported by a credit...
AI summary The section discusses credit metrics used by the Commission in past GCOC decisions, including EBIT coverage, FFO coverage, and FFO/debt ratios. These metrics are important for credit rating agencies when assessing company risk and assigning credit ratings.
Income tax rate 243. The Commission is analyzing credit metrics using both the current combined statutory income tax rate of 23 per cent, and a rate of zero. The income tax rate of zero accounts for the income-tax-exempt utilities, as well...
AI summary The Commission is evaluating credit metrics using two income tax rates: the current combined statutory rate of 23% and a zero rate, which reflects the status of income-tax-exempt utilities and those with no taxable income.
Mid-year CWIP as a percentage of invested capital - 246. The weighted average mid-year CWIP as a percentage of invested capital for the distribution utilities based on the 2023 Rule 005 reports is 2.89 per cent, and is 3.10 per cent for th...
AI summary The weighted average mid-year CWIP as a percentage of invested capital for distribution utilities is 2.89%, and for transmission utilities, it is 3.10%. These figures are used by the Commission in its credit metric calculations, as they represent the most recent data available. The Commission has updated its credit metric calculations at various equity ratios, reflecting an income tax rate of zero to address the impact of zero income tax on credit metrics.
Table 12. Credit metrics compared to equity ratios – Commission calculations – distribution utilities – income tax rate of zero EBIT coverage FFO coverage FFO/debt (%) 32 2.0 1.8 4.0 3.6 12.5 12.2 33 2.0 1.8 4.0 3.6 12.8 12.5 34 2.0 1.9 4....
AI summary The document presents a table comparing credit metrics such as EBIT coverage, FFO coverage, and FFO/debt percentages for distribution utilities under different income tax rates. It also includes equity ratios from the 2023 and 2018 GCOC decisions.
- 249. Table 15 sets out the minimum equity ratio that would be required, in conjunction with an approved ROE of 9.0 per cent, for distribution and transmission utilities in Alberta with an income tax rate of 23 per cent, as well as distri...
AI summary Table 15 outlines the minimum equity ratios required for distribution and transmission utilities in Alberta to achieve a credit rating in the A-range, based on different income tax rates and coverage ratios such as EBIT and FFO.
243 Decision 22570-D01-2018, PDF page 165, paragraph 777. Decision 20622-D01-2016, PDF page 104, paragraph 433. and transmission utilities meet the Commission's guidelines to achieve a credit rating in the A range.
AI summary The text references two regulatory decisions related to credit ratings for utilities, emphasizing the need for transmission and distribution utilities to meet credit rating guidelines in the A range.
7.5 Overall assessment of business risk - 251. In this section of the decision, the Commission considers whether business risk factors impacting all the utilities, or a particular segment of the utilities, require the Commission to adjust...
AI summary The Commission evaluates business risk factors affecting utilities, including cybersecurity, decarbonization policies, and macroeconomic factors, and considers whether these justify adjusting deemed equity ratios. Utilities argue for higher equity ratios due to increased risks, while interveners suggest maintaining or reducing them. Stranded asset risks and a recent court decision are also discussed.
DF page 20. 80 per cent of TriSummit's assets are regulated utility operations with 95 per cent of its revenue earned from those operations. With this profile, TriSummit has a BBB high credit rating.
AI summary TriSummit's profile indicates that 80% of its assets are regulated utility operations, generating 95% of its revenue from these operations, and it holds a BBB high credit rating.
N-21UARB APPROVAL SHEET Replace L6513/Upgrade Line Terminals
9 passages
e_0.jpeg) increasing just to cover additional borrowing costs. It might even cause it to be excluded from participating in some debt markets altogether.[9](#page-40-1) 3 The assessment of whether the Fair Return Standard has been met requi...
AI summary The Fair Return Standard requires that a utility's return be equivalent to the opportunity cost of capital, ensuring investors receive adequate returns for the risk taken. It also emphasizes the need for a return that maintains the utility's financial integrity, credit rating, and ability to attract capital on reasonable terms.
3 E. Integration of Canadian and U.S. Capital Markets 4 In a world of increasingly linked economies and capital markets, investors seek returns from a 5 global basket of investment options. Investors distinguish between risks on a country-...
AI summary This section discusses the integration of Canadian and U.S. capital markets, highlighting how investors assess country-specific risks using metrics like The Economist Intelligence Unit's country risk ratings, which rate Canada and the U.S. equally at AAA.
- 8 a) Maintain credit ratings of at least BBB+ from S&P or Baa1 from Moody's; - 9 b) Consistently pay quarterly cash dividends, and have not reduced or eliminated those 10 dividends in the past two years; - 11 c) Have positive earnings gr...
AI summary The text outlines several criteria that must be met, including maintaining credit ratings, consistently paying dividends, positive earnings growth projections, and deriving a significant portion of operating income from regulated operations.
12 d. Assessment of Credit Metrics Financial risk is also measured through other credit metrics, such as the ratio of Funds from Operations ("FFO") to debt and Debt to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA...
AI summary The document discusses the assessment of credit metrics for NSPI, highlighting that S&P adjusted credit metrics for NSPI in 2023 were weaker compared to companies in Canadian and other jurisdictions. It references credit metrics such as FFO to debt, Debt to EBITDA, and interest coverage ratios.
Further, as an integrated electric utility, S&P assesses NSPI's financial risk using its medial volatility table, under which financial risk is considered "Significant" when FFO / Debt is between 13 and 21 percent, whereas T&D utilities ar...
AI summary S&P changed its financial risk assessment of NSPI from 'Intermediate' to 'Significant' in May 2016 after moving it from the low volatility table to the medial volatility table, due to the substantial generation assets owned by NSPI, which are viewed as riskier than T&D utilities. This change is based on a comparison of NSPI's financial metrics with proxy groups.
1 e. Change in NSPI's Credit Rating Since 2021 S&P Global downgraded NSPI by two notches to BBB- from BBB+ in February 2023, 2 [65](#page-88-0) and DBRS Morningstar downgraded NSPI to BBB (high) from A (low) in December 2022.[66](#page-88-...
AI summary S&P Global and DBRS Morningstar downgraded NSPI's credit rating in 2022 and 2023, citing concerns over political intervention and regulatory changes in Nova Scotia, including caps on rate increases and return on equity. The ratings agencies also highlighted risks related to NSPI's reliance on coal-based generation and limited financial cushions.
20 f. Conclusions on Financial Risk The 40.0 percent deemed common equity ratio for NSPI is similar to the Canadian average of 40.6 percent for investor-owned electric utilities, despite the fact that the Company owns substantial regulated...
AI summary NSPI's 40.0% deemed common equity ratio is below the U.S. Electric proxy group average of 51.1%, and its long-term issuer rating (BBB-) is lower than the proxy group average (A-), indicating higher financial risk compared to peers. This is attributed to weaker credit metrics and a higher risk profile due to its regulated generation assets.
c. Generation Ownership Unlike most other regulated electric utilities in Canada, NSPI owns substantial regulated generation assets. In 2024, NSPI derived 63.9 percent of its power supply from Company-owned generation facilities, while pur...
AI summary NSPI owns a significant portion of its power supply through regulated generation assets, unlike most other Canadian utilities. This ownership structure influences its business risk profile, as noted by credit rating agencies like Moody's, which assess utilities with generation assets as having higher business risk.
essured NSPI's credit measures." How was this factored into Concentric's analysis? 1 implemented a FAM, subject to external audits and associated regulatory proceedings every two 2 years thereafter. 3 Fuel adjustment clauses are common acr...
AI summary The document discusses Nova Scotia Power Inc.'s Fuel Adjustment Mechanism (FAM), including its implementation, audit requirements, and credit rating implications. It notes that NSPI's FAM design, including regulatory lag, increases risk compared to peers, and highlights a $278 million deferred fuel cost balance that must be recovered from customers, potentially raising bills.
N-22Decision Ontario Energy Board EB-2024-0063
7 passages
explicit adjustments to its ROE or capital structure recommendations on the basis of the energy transition, as these effects were captured in the financial models used to analyze the cost of capital. The EDA noted the point raised by certa...
AI summary The EDA and OEA discuss the impact of the energy transition on utilities, noting that increased revenues from higher demand are not guaranteed and that risks such as stranded assets and declining demand for natural gas pose challenges. They argue that the energy transition increases capital requirements and risks for utilities, affecting their creditworthiness.
Expert Report Proposals The expert reports differed on their assessment of the OEB's current approach to the determination of debt and equity from the perspective of investors. LEI and Dr. Cleary both generally agreed that the OEB's existi...
AI summary The expert reports differ on the OEB's approach to determining the cost of capital, with LEI and Dr. Cleary supporting the OEB's methods, while Concentrics and Nexus highlight challenges and shortcomings in the approach. Nexus argues the OEB's method fails to meet the FRS and does not adequately serve equity investors.
e impact or downgrade(s) to a company's credit rating will also result in additional ratepayer costs, as the downgraded company's access to and cost of funding is also negatively impacted as a result. The OEA concluded that Dr. Cleary's re...
AI summary The OEA argues that Dr. Cleary's ROE recommendations fail the FRS and could negatively impact Ontario utilities' growth and funding access. It emphasizes that the current OEB formula aligns with Canadian utility returns but lags behind U.S. counterparts. The OEA supports evolving the 2009 Report's approach to meet FRS while maintaining foundational principles and ensuring fair returns amid significant capital investments.
ler number of comparators. As noted earlier, the OEB also has concerns about the ability to find true comparators from the U.S., which limits the number of comparators that might be definitively used. However, a significant recommended cha...
AI summary The OEB is cautious about significantly adjusting the ROE formula, noting concerns from the EDA and OEA about potential negative impacts on credit ratings, debt financing, and utility growth. Dr. Cleary acknowledges the risks of a steep ROE reduction, and the OEB emphasizes the need for a fair return to maintain investor confidence and service reliability.
d, in particular the acute risks to the natural gas distribution segment caused by the energy transition, Concentric found natural gas distribution to be riskier than electric distribution operations. Nexus proposed that the OEB retain its...
AI summary The text discusses recommendations from Dr. Cleary regarding the allowed equity ratios for Hydro One and Enbridge Gas, considering factors like credit ratings, debt costs, and financial risks. Nexus suggested retaining the OEB's existing policy for electricity distributors, while Concentric highlighted increased risks in natural gas distribution due to the energy transition.
Specific Items Monitored LEI stated that consistent with the OEB's existing policy, OEB staff should continue to monitor the cost of capital parameters and test their reasonableness in the context of prevailing macroeconomic conditions on...
AI summary The Office of the Energy Board (OEB) is advised to monitor cost of capital parameters quarterly and consider including credit ratings and capital injection details in annual reporting. LEI, Dr. Cleary, and Nexus support this approach, while Concentric argues against it, suggesting annual benchmarking of ROEs and macroeconomic factors instead.
Findings The OEB will continue to monitor market conditions. It is expected that OEB staff will undertake this monitoring at least quarterly and will report internally on their assessment. This monitoring will include quarter-over-quarter...
AI summary The OEB will monitor market conditions quarterly, focusing on DSTDR, DLTDR, and ROE formulas, and will report externally annually on the reasonableness of cost of capital parameters. The OEB will require reporting of major long-term debt issuances over $50 million by Ontario utilities but not credit ratings outside of rebasing rate applications.